On Monday, President Obama unveiled a plan that would close tax loopholes for corporations that invest their money overseas rather than in the United States.
The administration claims by doing this the government will raise more than $200 billion during the course of 10 years.
Specifically, the plan aims to eliminate a provision that allowed U.S. companies to defer paying U.S. taxes on their profits they make on overseas investments.
The provision provides a capacity for companies to tell the U.S. government they are paying taxes abroad, allow companies to tell countries in which they are investing that they are paying taxes to the United States and then consequentially not pay taxes to anybody.
“The current tax code makes it too easy for a small number of individuals and companies to abuse overseas tax havens to avoid paying any taxes at all. If financial institutions won’t cooperate with us, we will assume that they are sheltering money in tax havens and act accordingly,” said President Obama at the press conference said.
The plan also includes hiring 800 IRS agents to enforce the U.S. tax code.
Not only will the closure of this loophole generate money and eliminate tax evasion, it will grow the economy and job market domestically.
Enticing corporations and financial institutions to invest money in businesses in America rather than overseas will help generate revenue.
Since President Obama took the oath of office he has created policies and initiatives that have increased transparency throughout the government. Going after large corporations that have enough resources to invest overseas has not always been politically smart. However, Obama, starting during his campaign, vowed to end a tax code that allows too many to escape paying their fair share.
The plan is expected to be debated heavily in Congress and strong opposition is expected. However, the Democrats’ power is continually expanding.
Arlen Specter, senator from Pennsylvania, recently switched his party affiliation from Republican to Democrat. With Specter on the Democrats’ side of the aisle, they now have 59 senators.
Al Franken is expected to be the 60th senator once the race in Minnesota comes to a conclusion. Currently the results of the election are being held up in the state courts.
If the Democrats are able to secure the 60 seat majority it would be a filibuster-proof Senate for the president to work with.
As we go through this economic recession, which can be blamed on the deregulation of the marketplace, policies like these will only secure fairness in the free market.
Corporations and financial institutions set the agenda in Washington and had been able to get exactly the type of policies that were best for their company growth, even at the expense of escaping taxes.
Everyone will have to begin to pay their fair share in order to stimulate the economy and generate funds.
The hope is that it will pull us out of the bottom of this recession, corporations included.
Nobody likes paying taxes, but taxes provide free education, infrastructure and protection.
Our system of governance should not cater to these corporations that are able to escape the basic duty that all other Americans are supposed to adhere to. This plan sends a strong message to corporations that thought they could get find a way around the system.